Jackpot Justice: The Value of Inefficient Litigation

Litigation seems to be a Pareto-ineffcient outcome of pretrial bargaining; however, this paper shows that litigation can be the outcome of rational behavior by a litigant and her attorney. If the attorney has more information than his client concerning the characteristics of the lawsuit, the client can use litigation as a way of extracting information. I show that, counterintuitively, litigation will occur only when the plaintiff is pessimistic about her prospects at trial. Even if the plaintiff could obtain a higher payoff from bargaining than from litigation-without-bargaining, bargaining may not occur in equilibrium. The plaintiff is more likely to sue if she is more pessimistic about winning damage in court and if litigation is more risky. Litigation is less likely to occur if the plaintiff receives third party financing for litigation

Misassigning Income: The Supreme Court and Attorneys\u27 Fees

This past term\u27s Supreme Court decision in Commissioner v. Banks and Commissioner v. Banaitis distorts foundational principles, known as assignment of income law, which help identify the person who must report income for federal tax purposes. The Court holds that assignment of income principles require a plaintiff to report as income the portion of a recovery paid to the plaintiffs attorney as a contingent fee. As a result, the plaintiff is taxed at excessively high rates, which may in some cases equal or exceed a confiscatory 100%. Taxing the plaintiff on the attorney-fee portion of a recovery also undermines the objective of federal fee-shifting statutes, which is to enable a prevailing plaintiff to act as a private attorney general by employing an attorney without cost. Although recent legislation changes the result in the future for specified categories of litigation, including a wide variety of civil rights and employment claims, there remain significant classes of cases, including nonphysical torts, physical torts with punitive damages, and environmental statutes with fee-shifting provisions, to which this recent legislation does not apply and in which plaintiffs will continue to be taxed unfairly under the Court\u27s decision

Case Note: Transportation Law - Urban Mass Transportation Act - The Absence of Statutory Provisions Relating to Standing and Judicial Review Does Not Preclude a Claimant from Seeking Relief in Federal Court

This case note by Terry L. Barnich analyzes the Seventh Circuit\u27s decision in Bradford School Bus Transit, Inc. v. Chicago Transit Authority, 537 F.2d 943 (7th Cir. 1976), cert denied, 97 S. Ct. 797 (1977). The plaintiff, a private bus company, sought a declaration that the Chicago Transit Authority violated section 1602(a) of the Urban Mass Transportation Act when it competed with the private bus line for a contract with the Chicago Board of Education. The United States District Court for the Northern District of Illinois declared that the plaintiff lacked standing under the Act and dismissed the complaint. The Seventh Circuit held that plaintiff had sufficient standing to sue under the Act. It concluded that plaintiff had adequately alleged an unjust injury due to agency action, and had sufficiently demonstrated that its interests were protected by the Act\u27s relevant provision. Nevertheless, it refused to review the administrative action because complaint procedures and remedies were available and plaintiff was required to exhaust those administrative remedies

Decoupling Liability: Optimal Incentives for Care and Litigation

A "decoupled" liability system is one in which the award to the plaintiff differs from the payment by the defendant. The optimal system of decoupling makes the defendant's payment as high as possible. Such a policy allows the award to the plaintiff to be lowered, thereby reducing the plaintiff's incentive to sue -- and hence litigation costs -- without sacrificing the defendant's incentive to exercise care. The optimal award to the plaintiff may be less than or greater than the optimal payment by the defendant. The possibility of an out-of-court settlement does not qualitatively affect these results. If the settlement can be monitored, it may be desirable to decouple it as well.

Exxon Mobil Corp. v. Allapattah Services Inc.

In diversity cases, only one plaintiff or class member must satisfy the amount in controversy requirement

The Government as Litigant: Further Tests of the Case Selection Model

We develop a model of the plaintiff's decision to file a law suit that has implications for how differences between the federal government and private litigants and litigation translate into differences in trial rates and plaintiff win rates at trial. Our case selection model generates a set of predictions for relative trial rates and plaintiff win rates depending on the type of case and whether the government is defendant or plaintiff. In order to test the model, we use data on about 350,000 cases filed in federal district court between 1979 and 1997 in the areas of personal injury and job discrimination where the federal government and private parties work under roughly similar legal rules. We find broad support for the predictions of the model.

Voluntary Dismissal of Time-Barred Claims

Both state and federal courts have procedural rules that allow a plaintiff to voluntarily dismiss a claim without prejudice and then to refile it within the applicable statute-of-limitations period. However , a plaintiff’ s right to this procedural avenue is not absolute, and courts maintain broad discretion in deciding whether to dismiss a claim with or without prejudice. If a court allows a plaintiff to voluntarily dismiss a time-barred claim without prejudice, the plaintiff may be able to refile the claim in a jurisdiction with a longer statute of limitations. As a result, the defendant loses the ability to assert a statute-of-limitations defense in subsequent litigation. Courts disagree about whether the defendant’s loss of a statute- of-limitations defense constitutes “clear legal prejudice” sufficient to bar voluntary dismissal without prejudice. This Note explores this disagreement. First, it examines the two ways courts currently decide motions for voluntary dismissal of time-barred claims. Next, it argues that both approaches overlook a fundamental factor: res judicata (claim preclusion). Specifically, courts do not consider that statute-of-limitations dismissals are not claim preclusive in every jurisdiction. To account for the differences in preclusion law, this Note proposes that, as a threshold inquiry, courts should determine what the claim-preclusive effect of a statute-of-limitations dismissal would be. Based on this determination, a court can decide whether the loss of a statute-of-limitations defense results in “clear legal prejudice” to the defendant and whether a dismissal without prejudice is warranted

Res Judicata: Prior Adjudication of Negligence Bars Relitigation of That Issue by Defendant to Former Action

Applying state substantive law, the Fourth Circuit held that a prior adjudication of negligence in an action brought against the present plaintiff was res judicata, even though defendant was not a party to the former action. The court discarded the mutuality rule and denied relitigation on the ground of effecting the policy of res judicata without impairing the litigant\u27s constitutional right to a day in court, but failed to acknowledge the nature and extent of its investigation of plaintiff\u27s former defense

Jaramillo v. Ramos, 136 Nev. Adv. Op. 17 (Apr. 2, 2020)

The Court found a plaintiff is not required to provide expert testimony to survive a defendant’s summary judgment motion when the plaintiff is relying on the res ipsa loquitur statute’s prima facie case of negligence. Rather, plaintiff must only establish facts that entitle it to a rebuttable presumption of negligence under Nevada’s res ipsa loquitur statute. Whether a defendant can rebut the presumption through their own expert testimony or evidence is a question of fact for the jury

The Optimal Decoupled Liabilities: A General Analysis

The “decoupled” liability system awards the plaintiff an amount that differs from what the defendant pays. The previous approach to the optimal decoupling design is based on the assumption of complete information, which results in an optimal liability for the defendant “as much as he can afford.” This extreme conclusion may hinder the acceptability of the decoupling system. This paper proposes an alternative design based on the assumption that agents in the post-accident subgame have asymmetric information. Our model indicates that the optimal penalty faced by the defendant is generally greater than the optimal award to the plaintiff. When the potential harm is sufficiently large, the optimal penalty can be approximated by a multiple of the harm, but the plaintiff receives only a finite amount of the damages regardless of the loss suffered. Such a decoupling scheme deters frivolous lawsuits without reducing the defendants’ incentives to exercise care. Additionally, this paper derives comparative static results concerning how the trial costs of the plaintiff and defendant affect the optimal design of decoupling.